Fed Chairman: Loosen lending restrictions

11/9/2011

Federal Reserve Chairman Ben Bernanke recently spoke during a two-day conference that explored ways the Fed can help small businesses obtain loans, The Associated Press reports.

Bernanke encouraged bank examiners to take a more "balanced approach" when reviewing applications for small business loans, Reuters notes.

"We would like to foster an environment in which lenders do all they can to meet the needs of creditworthy borrowers while maintaining appropriately prudent underwriting standards," Bernanke said, as quoted by the news source.

The AP adds that the Fed has been holding training sessions for banks to ensure that they are properly catering to small business borrowers. This comes as a result of many smaller companies complaining of restrictive regulations that have prevented them from receiving capital.

Bernanke reasserted that the last couple years have been difficult for small firms, and because small businesses have played in important role in fueling economic recovery in the past, it's integral that banks provide them with borrowing opportunities.

One example of curtailed lending could be seen in the federal Small Business Lending Fund, which allocated $30 million to banks to be distributed to small business owners. However, due to a stringent application process, only $4 million worth of loans were dispersed.